Our opinion on the current state of SNT

Santam, recognized as South Africa's leading short-term insurer, commands approximately 22% of the market share. Distinct from engaging in endowment insurance, annuities, or investment insurance, Santam specializes in insuring assets such as buildings and vehicles, and protecting individuals against significant risks like income loss due to disability or death. The insurer handles the initial R150 million of any claim, beyond which it depends on its reinsurance policies. Santam holds a level 1 BEE status and boasts a workforce exceeding 6,000 employees.

In response to the Ma-Afrika judgement, Santam augmented its provision for contingent business interruption (CBI) by R1.7 billion, showcasing its commitment to reliability and quality, traits that have made it one of the JSE's standout shares. Despite facing challenges such as the civil unrest in July 2021, Santam demonstrated resilience and growth.

For the first half of 2023, the company reported a 7% increase in gross written premiums and a return on shareholders' funds of 24%, with headline earnings per share (HEPS) rising to 1170c from 475c in the prior period. The company acknowledged the impact of weak economic growth and inflationary pressures on insurance growth prospects, alongside significant claims frequency due to adverse weather conditions, including catastrophic flooding in the Western Cape in June 2023.

An operational update for the nine months ending on 30th September 2023 revealed a 7% growth in premium for conventional insurance, with gross written premiums increasing by 4%. A notable achievement during this period was the traction gained through the MTN partnership in Santam Partner Solutions, resulting in nearly 100,000 new policies sold.

Looking ahead to the full year ending 31st December 2023, Santam anticipates a HEPS increase of between 17% and 37%, buoyed by strong returns on local and foreign money market and fixed interest investments, alongside the impact of a depreciating rand. Currently, the share is valued at a P/E of 12.29, underscoring its status as a prime example of a blue-chip investment, characterized by a robust balance sheet and a history of consistent earnings growth over many years.

Santam's share price trajectory over the past 37 years—from 90c in 1985 to around R295 today—illustrates the company's enduring value and appeal. Given its solid financial performance and strategic positioning, Santam represents a compelling addition to any private investor's portfolio, combining stability with potential for continued growth.